The first section of this chapter looks at the internationalization of the London securities market over the period from 1850 to 1914. This was influenced both by transferable securities becoming ...
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The first section of this chapter looks at the internationalization of the London securities market over the period from 1850 to 1914. This was influenced both by transferable securities becoming commonplace for governments and businesses around the world, and by the transformation of communications with the development of the telegraph and then the telephone. These developments necessitated increased capacity to cope with the growing volume of securities traded, which included expansion of the trading floor, increasing membership, and the attraction of new people into the profession of stockbroking. The second section looks at the accompanying changes in the organizational and physical structure of the London Stock Exchange. The remaining sections look specifically at the expansion of membership, relationships and rivalry within the Stock Exchange, and the relationship of the Exchange to the money and capital (securities) markets.Less

From Domestic to International, 1850–1914

Ranald C. Michie

Published in print: 2001-04-26

The first section of this chapter looks at the internationalization of the London securities market over the period from 1850 to 1914. This was influenced both by transferable securities becoming commonplace for governments and businesses around the world, and by the transformation of communications with the development of the telegraph and then the telephone. These developments necessitated increased capacity to cope with the growing volume of securities traded, which included expansion of the trading floor, increasing membership, and the attraction of new people into the profession of stockbroking. The second section looks at the accompanying changes in the organizational and physical structure of the London Stock Exchange. The remaining sections look specifically at the expansion of membership, relationships and rivalry within the Stock Exchange, and the relationship of the Exchange to the money and capital (securities) markets.

The first section of this chapter outlines the growing threats to the London Stock Exchange through the 1970s, including the ability of its members to block new proposals by the Council of the Stock ...
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The first section of this chapter outlines the growing threats to the London Stock Exchange through the 1970s, including the ability of its members to block new proposals by the Council of the Stock Exchange, the investigation by the Monopolies Commission into the various restrictive practices of the Stock Exchange, relations with and attitude of the government, the formation of the Council of the Securities Industry (CSI), which was to take over responsibility for the Stock Exchange and other components of the securities market. The second section of the chapter discusses the limited responses of the Stock Exchange to these threats. The next two sections discuss technology and competition (from computerized trading systems), and change among the members (mergers, which resulted in a disproportionately large number of large firms as members, and a loss in numbers of jobbers). The last section looks at market opportunities––domestic corporate securities, government debt securities, loss of the foreign securities, traded options, the collapse of the securities market in 1974, and the by‐now limited role of the money market.Less

Prelude to Change, 1970–1979

Ranald C. Michie

Published in print: 2001-04-26

The first section of this chapter outlines the growing threats to the London Stock Exchange through the 1970s, including the ability of its members to block new proposals by the Council of the Stock Exchange, the investigation by the Monopolies Commission into the various restrictive practices of the Stock Exchange, relations with and attitude of the government, the formation of the Council of the Securities Industry (CSI), which was to take over responsibility for the Stock Exchange and other components of the securities market. The second section of the chapter discusses the limited responses of the Stock Exchange to these threats. The next two sections discuss technology and competition (from computerized trading systems), and change among the members (mergers, which resulted in a disproportionately large number of large firms as members, and a loss in numbers of jobbers). The last section looks at market opportunities––domestic corporate securities, government debt securities, loss of the foreign securities, traded options, the collapse of the securities market in 1974, and the by‐now limited role of the money market.

This chapter discusses the lead up to the ‘Big Bang’ and its effects––the Big Bang refers to the abolition of fixed commissions and the single capacity on 27 October 1986, both of which had been at ...
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This chapter discusses the lead up to the ‘Big Bang’ and its effects––the Big Bang refers to the abolition of fixed commissions and the single capacity on 27 October 1986, both of which had been at the centre of London Stock Exchange thinking for most of the twentieth century, and certainly since 1945. This move followed the abolition of exchange controls in 1979, and the associated far‐reaching changes on the securities market. The path from one to the other is traced, including the loss of the Stock Exchange's monopoly position within the securities market in January 1986. The new ways and roles that the Stock Exchange was forced to adopt during the early 1980s are described, including its merger with ISRO (International Securities Regulatory Organisation), its failure to merge with LIFFE (London International Financials Futures Exchange), expansion of securities traded on SEAQ (Stock Exchange Automated Quotations) international, and its opening of membership to global players. The last section of the chapter discusses further changes to the Stock Exchange that occurred to reflect the completely changed nature of its membership, including alterations in the degree of control and supervision exercised, and the ending of the Compensation Fund.Less

Big Bang

Ranald C. Michie

Published in print: 2001-04-26

This chapter discusses the lead up to the ‘Big Bang’ and its effects––the Big Bang refers to the abolition of fixed commissions and the single capacity on 27 October 1986, both of which had been at the centre of London Stock Exchange thinking for most of the twentieth century, and certainly since 1945. This move followed the abolition of exchange controls in 1979, and the associated far‐reaching changes on the securities market. The path from one to the other is traced, including the loss of the Stock Exchange's monopoly position within the securities market in January 1986. The new ways and roles that the Stock Exchange was forced to adopt during the early 1980s are described, including its merger with ISRO (International Securities Regulatory Organisation), its failure to merge with LIFFE (London International Financials Futures Exchange), expansion of securities traded on SEAQ (Stock Exchange Automated Quotations) international, and its opening of membership to global players. The last section of the chapter discusses further changes to the Stock Exchange that occurred to reflect the completely changed nature of its membership, including alterations in the degree of control and supervision exercised, and the ending of the Compensation Fund.

The Big Bang described in the last chapter appeared to have answered the doubts over the future of the London Stock Exchange, but from the late 1980s onwards into the 1990s, it both waned in ...
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The Big Bang described in the last chapter appeared to have answered the doubts over the future of the London Stock Exchange, but from the late 1980s onwards into the 1990s, it both waned in importance within the British financial system and faced increasing competition from rival foreign stock exchanges. This chapter discusses the reasons for this, starting in the first section with relations with government, since one uncertainty was the level of freedom from government control that the Stock Exchange was to enjoy. With the disappearance of the Stock Exchange's quasi‐official status in the 1990s, there still remained doubts over the role that it had to play in the area of securities market supervision, and the next section of the chapter discusses this situation, the effect of the changing nature of its membership, the disaster over settlement services (the replacement of the successful TALISMAN (Transfer Accounting and Lodgement for Investors, Stock Management for Jobbers) by TAURUS (Transfer and Automated Registration of Uncertificated Stock) and the subsequent failure of TAURUS), and the eventual successful replacement of the SEAQ (Stock Exchange Automated Quotations) trading system by the SEQUENCE trading system from 1993 onwards. The third section of the chapter looks at the provision of the market, and the fact that with the proposed introduction of specialists or sole traders in 1992, the Stock Exchange had once again been brought to the attention of the Office of Fair Trading; competition was also forcing a re‐examination of the way the Stock Exchange's market was organized, and this resulted in the introduction in 1997 of order‐driven trading in the form of SETS (Stock Exchange Trading Service); this section also looks at the abandonment of the traded options market to LIFFE (London International Financials Futures Exchange) and of any pretensions to the futures market, the decline of the USM (Unlisted Securities Market) and its replacement by AIM (Alternative Investment Market), negotiations with various foreign stock markets, and the changing investment environment. The last part of the chapter looks specifically at the changing membership of the Stock Exchange.Less

Black Hole

Ranald C. Michie

Published in print: 2001-04-26

The Big Bang described in the last chapter appeared to have answered the doubts over the future of the London Stock Exchange, but from the late 1980s onwards into the 1990s, it both waned in importance within the British financial system and faced increasing competition from rival foreign stock exchanges. This chapter discusses the reasons for this, starting in the first section with relations with government, since one uncertainty was the level of freedom from government control that the Stock Exchange was to enjoy. With the disappearance of the Stock Exchange's quasi‐official status in the 1990s, there still remained doubts over the role that it had to play in the area of securities market supervision, and the next section of the chapter discusses this situation, the effect of the changing nature of its membership, the disaster over settlement services (the replacement of the successful TALISMAN (Transfer Accounting and Lodgement for Investors, Stock Management for Jobbers) by TAURUS (Transfer and Automated Registration of Uncertificated Stock) and the subsequent failure of TAURUS), and the eventual successful replacement of the SEAQ (Stock Exchange Automated Quotations) trading system by the SEQUENCE trading system from 1993 onwards. The third section of the chapter looks at the provision of the market, and the fact that with the proposed introduction of specialists or sole traders in 1992, the Stock Exchange had once again been brought to the attention of the Office of Fair Trading; competition was also forcing a re‐examination of the way the Stock Exchange's market was organized, and this resulted in the introduction in 1997 of order‐driven trading in the form of SETS (Stock Exchange Trading Service); this section also looks at the abandonment of the traded options market to LIFFE (London International Financials Futures Exchange) and of any pretensions to the futures market, the decline of the USM (Unlisted Securities Market) and its replacement by AIM (Alternative Investment Market), negotiations with various foreign stock markets, and the changing investment environment. The last part of the chapter looks specifically at the changing membership of the Stock Exchange.

Although the London Stock Exchange had begun to review its rules and regulations from September 1916 onwards, there was very little planning to meet the problems and competition likely to be faced in ...
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Although the London Stock Exchange had begun to review its rules and regulations from September 1916 onwards, there was very little planning to meet the problems and competition likely to be faced in the post‐First World War world. Despite all the changes inside and outside the Stock Exchange that had taken place since August 1914, there was only a limited recognition that these had more than temporary consequences. This chapter discusses the resultant challenges and opportunities in the period between the two wars. There are three sections, which look at the legacy of war, the organization of the Stock Exchange, and membership. The next chapter looks at the changing market place over the same period.Less

Challenges and Opportunities, 1919–1939

Ranald C. Michie

Published in print: 2001-04-26

Although the London Stock Exchange had begun to review its rules and regulations from September 1916 onwards, there was very little planning to meet the problems and competition likely to be faced in the post‐First World War world. Despite all the changes inside and outside the Stock Exchange that had taken place since August 1914, there was only a limited recognition that these had more than temporary consequences. This chapter discusses the resultant challenges and opportunities in the period between the two wars. There are three sections, which look at the legacy of war, the organization of the Stock Exchange, and membership. The next chapter looks at the changing market place over the same period.

This chapter addresses the continuing decline and failure of the London Stock Exchange to adjust to change during the 1960s, when the government rather than the market continued to be the major ...
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This chapter addresses the continuing decline and failure of the London Stock Exchange to adjust to change during the 1960s, when the government rather than the market continued to be the major influence over the way it developed. The first section of the chapter discusses relations with the government. The next discusses relations with the members––where the desire was to create a level playing field for both members and non‐members, and now became an equal desire to ensure that all members had both the training and the capital to enable them to play an active role in the market, whilst not posing a threat to others; however, the members themselves were hostile to the admission of both women and foreigners, both of whom were keen to become members. The third section of the chapter discusses continuing competition with provincial and foreign stock exchanges, and the failure of the London Stock Exchange to capture or retain foreign business. The last section looks at money and capital (securities) markets in the 1960s.Less

Failing to Adjust, 1960–1969

Ranald C. Michie

Published in print: 2001-04-26

This chapter addresses the continuing decline and failure of the London Stock Exchange to adjust to change during the 1960s, when the government rather than the market continued to be the major influence over the way it developed. The first section of the chapter discusses relations with the government. The next discusses relations with the members––where the desire was to create a level playing field for both members and non‐members, and now became an equal desire to ensure that all members had both the training and the capital to enable them to play an active role in the market, whilst not posing a threat to others; however, the members themselves were hostile to the admission of both women and foreigners, both of whom were keen to become members. The third section of the chapter discusses continuing competition with provincial and foreign stock exchanges, and the failure of the London Stock Exchange to capture or retain foreign business. The last section looks at money and capital (securities) markets in the 1960s.

This chapter look at the decline of the London Stock Exchange during the 1950s. The first part discusses the ways that the Stock Exchange raised money to enable it to survive in the early 1950s, ...
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This chapter look at the decline of the London Stock Exchange during the 1950s. The first part discusses the ways that the Stock Exchange raised money to enable it to survive in the early 1950s, relations between it and the government (which were conducted informally through confidential exchanges between the Governor of the Bank of England and the Chairman of the Stock Exchange), the restoration of option dealing, and the use of the Stock Exchange by the government to police activities regarding securities. The second part discusses the policing of the members of the Stock Exchange, and the third discusses the growing competition from the provincial stock exchanges, closer integration with the London‐based North American brokerage houses, and the Stock Exchange's lack of concern with international business. The last section looks at money and capital (securities) markets in the face of the decline of the Stock Exchange over the 1950s.Less

Drifting Towards Oblivion, 1950–1959

Ranald C. Michie

Published in print: 2001-04-26

This chapter look at the decline of the London Stock Exchange during the 1950s. The first part discusses the ways that the Stock Exchange raised money to enable it to survive in the early 1950s, relations between it and the government (which were conducted informally through confidential exchanges between the Governor of the Bank of England and the Chairman of the Stock Exchange), the restoration of option dealing, and the use of the Stock Exchange by the government to police activities regarding securities. The second part discusses the policing of the members of the Stock Exchange, and the third discusses the growing competition from the provincial stock exchanges, closer integration with the London‐based North American brokerage houses, and the Stock Exchange's lack of concern with international business. The last section looks at money and capital (securities) markets in the face of the decline of the Stock Exchange over the 1950s.

As a successor to the previous chapter, which looked at organizational change in the London Stock Exchange between the two World Wars, this one looks at the changing market place over the same ...
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As a successor to the previous chapter, which looked at organizational change in the London Stock Exchange between the two World Wars, this one looks at the changing market place over the same period. The first part of the chapter discusses competition from British provincial stock exchanges, from international arbitrage, and from North American and continental banks. The second part looks at the money market, and the last looks at the capital (securities) market and reduced international market.Less

The Changing Market Place Between the Wars

Ranald C. Michie

Published in print: 2001-04-26

As a successor to the previous chapter, which looked at organizational change in the London Stock Exchange between the two World Wars, this one looks at the changing market place over the same period. The first part of the chapter discusses competition from British provincial stock exchanges, from international arbitrage, and from North American and continental banks. The second part looks at the money market, and the last looks at the capital (securities) market and reduced international market.

The first part of this chapter discusses the efforts by the London Stock Exchange to survive and prosper post‐war under continuing government control, and to try to avoid direct Treasury supervision ...
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The first part of this chapter discusses the efforts by the London Stock Exchange to survive and prosper post‐war under continuing government control, and to try to avoid direct Treasury supervision of the securities market––or even nationalization. Steps towards a peacetime operation are outlined––they were slow and had to be arranged in direct consultation with the government. The second part of the chapter describes the various post‐war institutional changes in the Stock Exchange in the light of the slowly emerging arrangement whereby it was trusted with responsible management of the securities market within a framework set by the (nationalized) Bank of England, and ultimately determined by the Treasury and government. The last part of the chapter looks at the declining importance of the Stock Exchange as the global securities market began to bypass London, as a result of the combined influence of both exchange controls and the Stock Exchange's own restrictive practices on international business; it was also unable to capitalize on its established domestic securities position.Less

Recovery and Crisis: 1945–1949

Ranald C. Michie

Published in print: 2001-04-26

The first part of this chapter discusses the efforts by the London Stock Exchange to survive and prosper post‐war under continuing government control, and to try to avoid direct Treasury supervision of the securities market––or even nationalization. Steps towards a peacetime operation are outlined––they were slow and had to be arranged in direct consultation with the government. The second part of the chapter describes the various post‐war institutional changes in the Stock Exchange in the light of the slowly emerging arrangement whereby it was trusted with responsible management of the securities market within a framework set by the (nationalized) Bank of England, and ultimately determined by the Treasury and government. The last part of the chapter looks at the declining importance of the Stock Exchange as the global securities market began to bypass London, as a result of the combined influence of both exchange controls and the Stock Exchange's own restrictive practices on international business; it was also unable to capitalize on its established domestic securities position.

Ranald Michie traces the history of the London Stock Exchange from its beginnings around 1700 to the end of the twentieth century, chronicling the challenges and opportunities it has faced, avoided, ...
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Ranald Michie traces the history of the London Stock Exchange from its beginnings around 1700 to the end of the twentieth century, chronicling the challenges and opportunities it has faced, avoided, or exploited over the years. Throughout, the history seeks to blend an understanding of the London Stock Exchange as an institution with that of the securities market of which it was––and is––such an important component; one cannot be examined satisfactorily without the other. Without a knowledge of both, for example, the causes of the ’Big Bang’ of 1986 would forever remain a mystery. However, the history of the London Stock Exchange is not just worthy of study for what it reveals about the interaction between institution and market. Such was its importance that its rise to world dominance before 1914, its decline thereafter, and its renaissance from the mid‐1980s explain a great deal about Britain's own economic performance and the working of the international economy.Less

The London Stock Exchange : A History

Ranald Michie

Published in print: 2001-04-26

Ranald Michie traces the history of the London Stock Exchange from its beginnings around 1700 to the end of the twentieth century, chronicling the challenges and opportunities it has faced, avoided, or exploited over the years. Throughout, the history seeks to blend an understanding of the London Stock Exchange as an institution with that of the securities market of which it was––and is––such an important component; one cannot be examined satisfactorily without the other. Without a knowledge of both, for example, the causes of the ’Big Bang’ of 1986 would forever remain a mystery. However, the history of the London Stock Exchange is not just worthy of study for what it reveals about the interaction between institution and market. Such was its importance that its rise to world dominance before 1914, its decline thereafter, and its renaissance from the mid‐1980s explain a great deal about Britain's own economic performance and the working of the international economy.